PD57AD | Costs Consequences Of Disclosure Guidance Applications | When Matters Become Formal And Contested

In Voltaire Capital Holdings Limited & Ors v Watson & Ors [2025] EWHC 1948 (Comm), Nigel Cooper KC (sitting as a Deputy Judge) departed from the default costs position for disclosure guidance applications under PD57AD, ordering the unsuccessful applicant to pay £63,267 in costs. This decision provides valuable guidance on when courts will treat supposedly informal disclosure guidance hearings as contested applications warranting inter partes costs orders.

The Default Costs Position Under PD57AD

Paragraph 11.5 of Practice Direction 57AD establishes a clear default position: costs of disclosure guidance applications are costs in the case unless otherwise ordered. This reflects the intended informal and cooperative nature of the disclosure guidance procedure, which envisages:

    • Maximum 60-minute hearings with 30 minutes pre-reading
    • Legal representatives with direct disclosure responsibility rather than counsel
    • Resolution through guidance rather than formal determination

The Practice Direction aims to foster a “new culture of disclosure stressing the imperative nature of party cooperation” – an aspiration that carries direct costs implications.

When Guidance Becomes Litigation | The Costs Turning Point

The judge identified several factors that transformed this disclosure guidance application into something warranting departure from the default costs position:

Scale and Complexity

    • 2.5+ hour hearing (versus standard 60 minutes)
    • 900-page hearing bundle including 261 pages of correspondence
    • Substantial skeleton arguments (16 and 39 pages)
    • Instruction of counsel, including leading counsel for the claimants

Nature of Contest The judge found the application was “conducted in a manner consistent with a heavily contested disclosure application rather than an application for informal guidance envisaged by PD57AD.” This characterisation proved crucial to the costs decision.

Relative Success The court conducted a detailed analysis of success:

    • Claimants substantially succeeded on the main issues
    • More hearing time spent on issues where claimants succeeded
    • Volume of documents from ordered searches significantly smaller than sought
    • Second Defendant’s limited success occupied minimal hearing time

The Costs Assessment | Significant Reductions Applied

The summary assessment demonstrates the court’s rigorous approach to costs recovery even for successful parties:

Solicitors’ Costs

    • Claimed: £59,862.75
    • Assessed: £46,000
    • Key reductions:
      • Hourly rates exceeding guideline rates without sufficient justification
      • £4,000 specific reduction for excessive time on witness statement preparation

Counsel’s Fees

    • Claimed: £34,297 (including leading counsel)
    • Assessed: £24,000
    • £10,000 reduction reflecting that leading counsel was unnecessary for the hearing

Final Calculation

    • Total assessed: £70,297
    • 10% reduction for opponent’s limited success: £63,267
    • Overall reduction: approximately 33% from amount claimed

Key Costs Principles Emerging

Procedural Defaults and Costs

The court dismissed the respondent’s reliance on the claimants’ failure to serve a statement of costs before the hearing (contrary to PD44 paragraph 9.5(4)(b)). The judge found:

    • Both parties could foresee costs applications would follow
    • The default caused no difficulty to either party or the court
    • Late submission did not prevent the claimants seeking costs

This pragmatic approach suggests procedural defaults in costs procedure may not defeat otherwise meritorious costs applications.

Attribution of Delay

The court rejected arguments that claimants’ delays necessitated the hearing, finding it “impossible to assign any responsibility for any delay.” This reinforces the difficulty of establishing causation for costs purposes where both parties contribute to procedural history.

Proportionality in Success

The 10% reduction for the opponent’s limited success demonstrates the court’s nuanced approach to “relative success” – even substantially successful parties may face reductions where opponents achieve discrete wins.

Implications for Costs Practice

This decision reinforces several important costs principles:

For Disclosure Applications

    • Courts will look beyond labels to substance when determining costs
    • Default positions are starting points, not immutable rules
    • The scale and manner of conduct matters more than the procedural vehicle

For Summary Assessment

    • Guideline rates remain starting points requiring justification for departure
    • Courts will scrutinise time spent on specific tasks
    • Necessity of leading counsel must be demonstrable, not assumed

Strategic Considerations

    • Parties escalating “informal” procedures risk adverse costs consequences
    • Providing hit counts and engaging cooperatively may influence costs outcomes
    • Limited success on discrete issues can reduce costs recovery even for substantially successful parties

The Broader Context | Costs and Cooperation

This judgment sits within the broader framework of disclosure reform emphasising cooperation and proportionality. The costs consequences here serve as a reminder that parties who transform cooperative procedures into adversarial contests may face financial penalties.

The decision also demonstrates the interplay between different costs regimes – whilst PD57AD creates specific defaults for disclosure guidance, the court retains discretion to apply general costs principles where the nature of proceedings warrants it.

Conclusion

Voltaire Capital Holdings provides clear guidance on when courts will depart from default costs positions in disclosure contexts. The message for practitioners is straightforward: approach disclosure guidance as intended – cooperatively and proportionately – or risk bearing the costs consequences of unnecessary escalation. The 33% reduction in assessed costs further reinforces that even successful parties must demonstrate both necessity and proportionality in their costs claims.

‘Henderson v Henderson’ Abuse Of Process | Late Costs Objection Survives Despite “Perverse” Reasoning Resulting In £Multi Million Costs Assessed At Nil

The High Court’s decision in The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 2044 (Ch) addresses when late-raised costs objections constitute a Henderson v Henderson abuse of process and the consequences of defective judicial case management in solicitor-client assessments.

Background

The case centres on three conditional fee agreements (CFAs) under which Rosenblatt Solicitors (now The Winros Partnership) acted for Global Energy Horizons Corporation in Chancery Division proceedings against a former associate, Mr Robert Gray, concerning alleged misappropriation of technology [§1]. The underlying dispute achieved mixed results: in December 2012, Vos J granted declarations that Mr Gray was in breach of fiduciary duty; in July 2015, Asplin J ordered Mr Gray to pay approximately £3.6 million; but Arnold J in May 2019 valued certain assets at nil and found no further sums payable [§2].

Three CFAs governed the retainer: CFA-1 (dated 8 December 2009), CFA-2 (dated 31 October 2010), and CFA-3 (dated 6 March 2013) [§§3–7]. Each contained provisions for an “Advance Fee” to be retained by Rosenblatt regardless of outcome, with additional fees and a success fee payable only on a “win”. CFA-3’s clause 14 set out termination provisions, including clause 14.3 which entitled Rosenblatt to end the agreement if it believed the client did not meet its responsibilities, in which case the client would pay fees for work done to the termination date and disbursements [§6(iv)].

The relationship between solicitor and client broke down, and Rosenblatt terminated the retainer by letter dated 24 February 2016. Trower J, on appeal from Master James, held that this termination was not pursuant to clause 14.3 but by Rosenblatt’s acceptance of Global Energy’s repudiatory breach [§9(v)].

Global Energy issued Part 8 proceedings on 1 April 2016 seeking detailed assessment [§25(i)]. This led to a 10-day preliminary issues hearing before Master James in 2019 [§15(i)], an appeal to Trower J determined in December 2021 [§§8–9], and ultimately an eight-day hearing including a five-day detailed assessment before Senior Costs Judge Gordon-Saker in 2024 [§10]. At that final hearing, Global Energy raised “Objection 1” for the first time, contending that the bills should be assessed at nil because when delivered, Global Energy was not liable to pay them as the fees remained contingent [§10]. The Senior Costs Judge upheld the objection, resulting in Rosenblatt’s costs being assessed at nil [§12].

Costs Issues Before the Court

The appeal concerned whether raising Objection 1 for the first time at detailed assessment—some eight years after proceedings commenced—constituted a Henderson v Henderson abuse of process. The court was required to determine:

  1. Whether Global Energy’s failure to raise Objection 1 at earlier hearings (including the 10-day preliminary issues trial before Master James) amounted to an abuse of process that should result in the objection being struck out [§§15–20].
  2. If abuse was established, whether there were exceptional circumstances excusing the late raising of the objection [§§24–27].
  3. The appropriate remedy if abuse was found [§§22–23].

The Senior Costs Judge had refused permission to appeal on the abuse of process ground; Joanna Smith J ordered that permission be considered at the appeal hearing [§13].

The Parties’ Positions

Rosenblatt’s Position: Rosenblatt argued that raising such a fundamental objection at this late stage was a clear Henderson v Henderson abuse [§11]. The Senior Costs Judge’s own findings supported this conclusion:

  • He found that Objection 1 “could easily have been added” to Global Energy’s case at the preliminary issues hearing [§15(ii), Decision/[25]]
  • He stated that “standard practice” in solicitor-client assessments is to determine liability issues first, before any detailed assessment [§15(v), Decision/[31]]
  • He expressly found that Global Energy “should have pleaded what is now Objection 1 in the Particulars of Claim” [§15(iv), Decision/[28]]

Rosenblatt contended that where a party has had the opportunity to raise an issue and failed to do so, strike-out is the appropriate remedy, and that a costs order was an insufficient sanction [§§22–23].

Global Energy’s Position: Global Energy raised two points by respondent’s notice [§22]. First, it argued that even if there was an abuse, the Senior Costs Judge had applied an appropriate sanction in the form of a costs order and striking out should not follow automatically [§22]. Second, and primarily, Global Energy argued the Decision could be upheld on other grounds: namely, that Global Energy could not properly be criticised for raising Objection 1 late because the court’s own procedural directions had precluded earlier raising of the issue [§24].

The Court’s Decision

Mr Justice Marcus Smith granted permission to appeal, finding that on the facts stated in the Decision itself, he could see “no clearer case of a Henderson v Henderson type abuse of process” [§16]. The court was highly critical of the Senior Costs Judge’s reasoning, stating it was “so wrong as to be perverse” [§16].

The court identified fundamental errors in the Senior Costs Judge’s approach. The consideration of whether Objection 1 had been previously determined by Master James or Trower J missed the point entirely: “the point is not whether Objection 1 was previously determined (obviously it was not) but whether the opportunity to resolve it was wrongly forsaken (which, on the Decision’s findings, it clearly was)” [§20]. Similarly, asking whether the earlier decisions would have been different had Objection 1 been argued, or noting that those hearings would have taken place anyway, “misses the point” [§20]. Had Objection 1 been dealt with at those hearings, “later stages in these proceedings would have been unnecessary, and considerable cost and time would have been saved for all concerned” [§20].

The court rejected Global Energy’s argument that a costs order was an appropriate alternative to strike-out. Had the Senior Costs Judge properly found an abuse of process, “striking out would be – on the basis of the facts found in the Decision – the only appropriate course in this case” [§23].

However, the appeal ultimately failed because of facts not properly addressed in the Decision [§§24–27]. Examination of the procedural history revealed that by an order dated 16 June 2016, Master James had acted of her own motion to direct only two preliminary issues, without first requiring the parties to plead their cases on liability [§25(iii)]. Marcus Smith J found this to be “a major procedural error on the part of the court” [§25(iv)]:

  • The court disregarded Rosenblatt’s suggestion of dealing with all questions of “liability” first [§25(iv)(a)]
  • The court directed only two preliminary issues, apparently considering these were the only possible liability issues—but Objection 1 was not identified [§25(iv)(b)]
  • The court should have required pleadings first, then made case management directions in light of the issues taken; instead, “case management preceded pleadings, with the result that the true issues between the parties were never identified until it was too late” [§25(iv)(c)–(d)]

In these circumstances, Global Energy and Rosenblatt “were quite properly following the direction of the court” [§26]. It would have been improper for Global Energy to shoehorn additional issues into an expressly limited preliminary issues hearing. There was therefore “nothing in Global Energy’s conduct to criticise, and it would be unfair to prevent Global Energy from taking Objection 1 now” [§26].

For these reasons—which were “not the reasons of the Senior Costs Judge”—permission to appeal was granted, but the appeal was dismissed [§28].

Court Orders Inspection In s70 Solicitors Act Assessment Post Service Of Points Of Dispute In The Absence Of Informative Replies

In Diagnostics.AI Limited v Dentons UK & Middle East LLP [2025] EWHC 2071 (SCCO), Costs Judge Nagalingam addressed a critical procedural issue in solicitor-client assessments: can the court order inspection of a solicitor’s files after points of dispute have been served? The case involved disputed bills exceeding £2 million (even after a substantial credit note) and demonstrates the costs risks of adopting an “obstructive” stance in assessment proceedings.

The Costs Dispute | An Unusual Procedural Position

The assessment proceedings had taken an unusual procedural route. The parties had agreed by consent to dispense with the standard inspection stage before service of points of dispute under CPR 46.10. This collaborative approach initially appeared constructive, with multiple consent orders and stays for settlement negotiations.

However, the cooperation foundered when the claimant served comprehensive 72-page points of dispute raising detailed objections to the bills. The defendant’s response was limited to a four-page reply addressing only preliminary points, declining to engage with any item-by-item challenges. This minimal engagement prompted the claimant’s application for inspection to break the negotiation deadlock.

The Jurisdictional Challenge | Multiple Routes to Inspection

The defendant, represented by Jamie Carpenter KC, mounted what the judge described as an “all or nothing response”, arguing the court lacked jurisdiction to order inspection at this procedural stage. The defendant contended that:

    • CPR 31.12(1) provided the only mechanism for ordering inspection
    • The application was defectively drafted
    • The request was “far too wide” and sought inspection of their “entire file”

Costs Judge Nagalingam rejected these arguments, finding multiple jurisdictional routes:

    1. CPR Part 31: Following Edwards v Slater & Gordon UK Ltd [2022] EWHC 1091 (QB), the judge held that “there is no express rule set out in Part 8 dispensing with the disclosure provisions of CPR Part 31.”
    2. Inherent jurisdiction: The court recognised the inherent jurisdiction to order inspection in solicitor-client assessments, citing the approach in Hanley v JC&A.
    3. General case management powers: CPR 3.1(2)(p) provided sufficient authority to make the order as part of managing the case and furthering the overriding objective.

The Costs of Preparing for Inspection | A Pyrrhic Objection

The defendant estimated the costs of preparing files for inspection at between £15,000 and £25,000. The judge was notably unimpressed by these figures, observing that:

    • These costs would “by and large be incurred in preparing the file for detailed assessment” anyway
    • Documents should already be organised in a firm of the defendant’s stature
    • Confidential materials subject to existing confidentiality orders ought to be kept in separate files
    • The estimate was either “hugely pessimistic or otherwise adopts an entirely unrealistic stance”

The Discretionary Decision | Obstructive Conduct Has Costs Consequences

The judge’s criticism of the defendant’s stance was particularly pointed: “I consider the Defendant’s stance and conduct to be somewhat obstructive whilst claiming in correspondence a desire to compromise.”

The combination of refusing inspection whilst providing only minimal replies made “a very lengthy detailed assessment hearing inevitable” – contrary to the overriding objective. The judge noted that inspection might either demonstrate to the claimant that their prospects were low or “cause the Defendant to reflect on the extent to which their work can be demonstrated at all.”

The Costs Order | The Price of Obstruction

Most significantly for costs practitioners, the judge ordered that the costs of the claimant’s application be paid by the defendant, to be summarily assessed if not agreed. This adverse costs order reflected the court’s view that the defendant’s opposition to inspection was unreasonable in the circumstances.

The judge also directed that:

    • The claimant should bear the cost of isolating documents already in their possession
    • Otherwise, the costs of inspection would be costs in the assessment

Practical Implications for Solicitor-Client Assessments

This decision reinforces several important principles for costs practitioners:

    1. Procedural flexibility exists: The court has multiple routes to order inspection in solicitor-client assessments, even after points of dispute have been served. Rigid adherence to one procedural interpretation will not prevent appropriate case management.
    2. Minimal engagement carries risks: Providing only cursory replies to detailed points of dispute, particularly on substantial bills, may be viewed as obstructive conduct warranting adverse costs consequences.
    3. Inspection costs arguments need substance: Generic objections about the burden of preparing files for inspection are unlikely to succeed, particularly where those costs would be incurred for detailed assessment preparation anyway.
    4. The overriding objective applies: Conduct that makes lengthy detailed assessment hearings inevitable runs counter to the overriding objective and may attract costs sanctions.
    5. Technical objections rarely succeed alone: Arguments based solely on alleged drafting defects or narrow procedural interpretations are unlikely to succeed where the substantive application has merit.

Criminal Legal Aid And The Indemnity Principle | No Escape From Legal Aid Rates In Contempt Proceedings

Background

The underlying proceedings concerned a contempt application brought by MBR Acres Limited and Others against Ms Gillian McGivern, a solicitor, for alleged breaches of an injunction order dated 10 November 2021. The application was heard before Mr Justice Nicklin on 21 and 22 July 2022, who dismissed it entirely, exonerating Ms McGivern. He awarded her costs on the indemnity basis and certified the application as “totally without merit”, additionally making a civil restraining order against the Respondents.

Ms McGivern had instructed Scott Moncrieff & Associates Ltd (SMA) on approximately 6 July 2022 and secured legal aid for her representation under the criminal legal aid regime, as contempt proceedings are classified as “criminal proceedings” for legal aid purposes under section 14(h) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Her application to instruct King’s Counsel (Mr Ashley Underwood KC) under legal aid was refused by Nicklin J, but she proceeded to instruct him privately.

The assessment of Ms McGivern’s costs between the parties came before Costs Judge Whalan in the Senior Courts Costs Office on 4 December 2023. Ms McGivern’s bill totalled £120,292.21. The Respondents had made a Calderbank offer of £21,000 on 12 August 2022 and a Part 36 offer of £33,000 on 5 September 2023.

Following his judgment of 18 July 2024, at a further hearing on 20 November 2024, Costs Judge Whalan assessed the bill at £20,673.34 – significantly below both the claimed amount and the £28,556.58 that the Legal Aid Agency (LAA) had assessed as payable. As this was less than both settlement offers, the Judge ordered Ms McGivern to pay the Respondents’ costs of the assessment proceedings. The Respondents had claimed £80,048.74 for their participation in the assessment and were awarded £53,044.65 (on the standard basis until 26 September 2023, and on an indemnity basis thereafter due to the Part 36 offer).

The net result was that Ms McGivern owed a balance to the Respondents. She appealed to the High Court, where the matter was heard by Mr Justice Sweeting sitting with Senior Costs Judge Rowley as an assessor on 3 July 2025.

Costs Issues Before the Court

The primary issue was whether a party with criminal legal aid defending civil contempt proceedings could recover costs from their opponent at private client rates, or whether recovery was limited to the rates prescribed under the Criminal Legal Aid (Remuneration) Regulations 2013. This raised fundamental questions about the application of the indemnity principle in criminal legal aid cases.

Specifically, the court needed to determine whether the indemnity principle – which prevents a party from recovering more in costs than they are liable to pay their own representatives – was disapplied in criminal legal aid cases. In civil legal aid, Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 expressly disapplies this principle, allowing costs to be determined “as if that party were not legally aided”. No equivalent provision exists in the criminal legal aid framework.

The court also had to consider whether Ms McGivern could rely on her retainer with SMA, which purportedly provided for a between the parties rate of £400 per hour, and whether she could retrospectively revoke her legal aid to claim at higher rates. Additionally, the court examined whether the LAA’s assessment of costs at a higher figure than ultimately allowed was binding on the costs judge.

A subsidiary issue concerned the recoverability of leading counsel’s fees, which had been privately incurred after the refusal of legal aid funding for King’s Counsel. The appeal also raised an application for a costs capping order in respect of the appeal proceedings.

The Parties’ Positions

Ms McGivern argued that she should recover costs at private client rates, contending that her retainer with SMA provided for £400 per hour. She submitted that preventing recovery at between the parties rates would lead to an absurd result and undermine access to justice. She relied on observations in R (on the application of E) v Governing Body of JFS [2009] UKSC 1 and King’s Lynn and West Norfolk Council v Bunning [2016] EWCA Civ 1037, which emphasised the importance of solicitors being able to recover remuneration at commercial rates when undertaking publicly funded work.

Ms McGivern further argued that paragraph 8.10 of the Criminal Contract Specification authorised providers to retain costs recovered from other parties exceeding LAA payments, and that Regulation 9 of the Criminal Legal Aid (Remuneration) Regulations 2013, which restricts payments from other sources, did not apply to High Court proceedings. She also contended that the LAA’s assessment at £28,556.58 should be treated as the minimum recoverable amount.

Regarding her retainer arrangements, Ms McGivern submitted that she could revoke her legal aid retrospectively and rely on the private retainer to claim higher rates. She argued that if counsel’s fees were refused under legal aid provisions, there was no prohibition against incurring them privately and recovering them at between the parties rates.

The Respondents maintained that the indemnity principle strictly limited recoverable costs to those payable under the legal aid scheme. They emphasised the absence of any provision equivalent to Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 within the criminal legal aid framework. They relied heavily on Liverpool Victoria Insurance Co Ltd v Khan and others [2022] EWHC B8 (Costs), where Costs Judge Leonard concluded that criminal legal aid does not disapply the indemnity principle.

The Respondents argued that any attempt to claim higher rates through the retainer with SMA constituted an unlawful attempt to “top up” legal aid payments, contrary to section 28 of LASPO. They submitted that paragraph 8.10 of the Criminal Contract Specification could not override statutory provisions, and that the LAA had no discretion to enhance the rates set in Schedule 4 of the Regulations. They characterised the suggestion of retrospectively revoking legal aid as “unprecedented and remarkable” and contrary to the principle in Radford v Frade [2018] EWCA Civ 119.

The Court’s Decision

Mr Justice Sweeting upheld Costs Judge Whalan’s decision, confirming that the indemnity principle applies to criminal legal aid cases without any statutory disapplication. The court found that whilst civil legal aid contains express provisions (Regulation 21) permitting recovery as if the party were not legally aided, no equivalent provision exists in the criminal legal aid framework.

The court rejected Ms McGivern’s argument that Regulation 9’s non-application to the High Court created a general disapplication of the indemnity principle. The judge reasoned that Regulation 9 merely provided specific examples where payments outside standard LAA funding were permitted; its limited scope reinforced rather than undermined the requirement for express legislative provision to disapply the indemnity principle.

Regarding paragraph 8.10 of the Criminal Contract Specification, the court agreed with the reasoning in Khan that whilst this provision authorises retention of costs recovered from other parties exceeding LAA payments, it cannot disapply the indemnity principle. The court emphasised that the indemnity principle is a rule of law requiring primary or secondary legislation for its disapplication, not merely contractual terms between the LAA and providers.

The court acknowledged the policy arguments raised, particularly the Supreme Court’s observations in JFS about the financial sustainability of publicly funded work. However, it distinguished these cases as concerning the court’s general discretion to award costs rather than directly analysing whether the statutory scheme disapplied the indemnity principle in criminal legal aid contexts. The judge stated that the function of courts is to apply the law as enacted by Parliament, not to rewrite it based on perceived policy shortcomings.

On the LAA assessment point, the court endorsed Costs Judge Leonard’s finding in Khan that the LAA “has no discretion to enhance the rates and fees set by paragraph 7(b) of Schedule 4” of the Regulations. Any purported agreement to pay enhanced rates was a matter between solicitors and the LAA with no bearing on amounts recoverable from the paying party.

The proposition that Ms McGivern could retrospectively revoke her legal aid was rejected as “untenable”. The court applied the principle from Radford v Frade that retrospective variation of a receiving party’s costs liability after a costs order cannot increase the paying party’s liability. Such an attempt would breach the statutory prohibition on topping up and be contrary to public policy.

The court refused the application for a costs capping order, finding that the criteria under CPR 3.20(2) were not met. Whilst acknowledging the wider implications for access to justice, the judge determined it would be unjust to require the Respondents to defend a costs order in their favour whilst potentially bearing their own reasonable costs. The court found that summary assessment provided adequate safeguards against disproportionate costs in the appeal.

CPR 44.3(5) Factors Considered | Proportionality Reduction Applied To Internal Communications Following Line-By-Line Assessment

The Senior Courts Costs Office has provided valuable guidance on proportionality principles in a personal injury case where a bill totalling £517,985 was reduced by over £193,000 following detailed assessment. In XX v Jordan Young & Aviva Insurance Limited [2025] EWHC 2073 (SCCO), the court examined how vulnerability factors under CPR 44.3(5)(f) interact with proportionality considerations, whilst also clarifying the court’s jurisdiction regarding retrospective conduct allegations.

The Costs Context

The costs dispute arose from personal injury proceedings that settled for £149,000 net of contributory negligence, having been pleaded at up to £2.5 million. Leigh Day’s bill comprised profit costs of £349,826.92, counsel’s fees of £39,638.54, other disbursements of £43,783.05, and VAT of £84,736.49. The defendants challenged whether costs exceeding £500,000 bore a reasonable relationship to the settlement achieved.

Following a three-day detailed assessment before Costs Judge Nagalingam, the initial line-by-line assessment reduced the bill to £339,565.16, representing a 34.4% reduction. However, the court’s proportionality analysis resulted in further cuts, ultimately bringing the total down to £324,029.77.

The Proportionality Assessment | West v Stockport Applied

The court applied the mandatory approach established in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, completing the line-by-line assessment before considering proportionality. Having given a preliminary indication that the costs as claimed appeared disproportionate, Costs Judge Nagalingam analysed each factor under CPR 44.3(5).

Sums in Issue | Beyond Settlement Figures

The court rejected any limitation to the £149,000 settlement figure. Instead, it adopted a “notional bracket” approach spanning £149,000 to £2.5 million as representing the range of possible outcomes. The judge concluded, however, that whilst the true value exceeded £149,000, it was realistically closer to that figure than the pleaded maximum.

The court noted that the settlement terms expressly referenced contributory negligence, indicating the gross value exceeded the net settlement regardless of any conduct arguments.

Complexity and Conduct Factors

The litigation was neither straightforward nor particularly complex. Liability remained disputed throughout, with significant injuries creating medical complexity that generated legal complexity in quantifying damages. The court recognised that the defendants’ conduct in keeping liability live without making early settlement proposals generated additional work for the claimants.

Claimant Vulnerability | Multiple Contributing Factors

The court determined that claimant vulnerability was a relevant factor under CPR 44.3(5)(f). The judge identified several contributing factors:

  • Significant physical injuries sustained by the claimant
  • Impact on family members from the same incident
  • Isolation during Covid-19 lockdowns affecting a previously sociable individual
  • Language barriers requiring interpreters for documentation
  • The claimant’s age and specific dialect requirements

The court emphasised there is “no automatic presumption that a Claimant of advanced years alone equates to vulnerability,” but found the combination of factors meant the solicitors were dealing with a vulnerable client requiring additional work.

Surveillance Evidence and Retrospective Conduct Allegations | Court’s Jurisdictional Limits

The defendants tried to use the assessment proceedings to establish misconduct and exaggeration based on surveillance evidence, despite having already agreed settlement terms and a standard basis costs order. The court firmly rejected this approach, stating: “I rejected the assertion that on an assessment of costs I could retroactively conduct a trial of an issue that the Defendant had alleged but neglected to run to trial as an argument.”

The judgment clarifies that agreed terms in costs orders referring to conduct do not create a gateway for retrospective determinations of issues not pursued at trial. Such clauses are unnecessary as parties can always raise conduct issues in points of dispute.

The Final Proportionality Reduction | Internal Communications Targeted

Despite finding vulnerability factors, the court concluded the assessed sum remained disproportionate. Rather than applying a broad percentage reduction, the court adopted a targeted approach, identifying internal communications as requiring further scrutiny.

This element had already been reduced from £27,724.50 to £22,946.15 during line-by-line assessment but was cut further to £10,000 plus VAT on a broad brush basis. The court considered this reasonable for the case circumstances, resulting in base profit costs (excluding assessment costs) of £169,534.99 plus VAT.

When Is A Solicitor Not a Solicitor?

The Senior Courts Costs Office recently delivered a judgment that provides helpful guidance on the importance of clearly documenting professional relationships in the legal sector. The case involved Global Sports Data and Technology Group Limited (GSDT), a data rights company, and IPS Law LLP, a boutique sports law firm, in a dispute over unpaid legal fees totalling £159,735.50 plus VAT.

The dispute arose from “Project Red Card”, an ambitious venture aimed at pursuing group litigation for data protection breaches affecting professional athletes. The project anticipated claims worth over £600 million against gaming and betting companies for allegedly misusing athletes’ personal data. At its heart lay a fundamental disagreement: was IPS Law acting as GSDT’s solicitor (and therefore

Senior Costs Judge Rowley was tasked with determining four preliminary points that would effectively resolve the entire costs dispute:

    1. Point 1: Technical formatting issues with the bill (contingent on the outcome of Points 2 and 3)
    2. Point 2: Whether an express or implied solicitor-client retainer existed between the parties
    3. Point 3: The effectiveness of a draft retainer letter dated August 2022
    4. Point 4: Treatment of third-party investment funds and various undisclosed invoices

The resolution of Points 2 and 3 proved decisive, as they addressed the fundamental question of whether any solicitor-client relationship existed that would create liability for legal fees.

The Parties’ Contrasting Positions

The Claimant’s Case

GSDT, represented by Andrew Hogan of counsel, maintained they had never instructed IPS Law as their solicitor. Instead, they argued for a commercial joint venture model where:

    • Each party contributed expertise at their own risk
    • Profits would be shared on a 10/10/10 basis (10% each to funders, IPS Law, and GSDT)
    • Payment would only arise from damages recovered under CFAs or DBAs with individual athletes
    • No party was liable for another’s costs in the absence of success

The Defendant’s Case

IPS Law, through Robin Dunne of counsel, claimed a traditional solicitor-client relationship existed from March 2021. They relied on:

    • The presumption that solicitors engaged to provide legal services are entitled to reasonable fees
    • PowerPoint presentations referring to “our legal team”
    • Press releases confirming IPS Law had issued letters before action
    • Budget documents showing costs incurred
    • An August 2022 retainer letter allegedly accepted by conduct

The Court’s Analysis of Key Evidence

The Significance of Timing and Documentation

The judge found the 18-month delay in producing any retainer letter particularly telling. This contrasted sharply with Mr Farnell’s prompt attention to client care documentation for individual athlete claims, suggesting he understood no traditional solicitor-client relationship existed with GSDT.

The Impact of Missing Documents

Several critical documents mentioned in parallel proceedings (IPS Law LLP v Safe Harbour Equity Distressed Debt Fund 3 LP) were conspicuously absent:

    • A “Global Agreement” dated September 2020
    • A December 2022 engagement letter
    • Multiple invoices referenced in cash accounts

The judge viewed this selective disclosure with considerable concern, particularly given Mr Farnell’s remarkable response when questioned: “if it’s not in the bundle, it’s not before the court.”

Costs and Investment Analysis

The court examined various financial aspects that influenced the decision:

    1. The Freeths Precedent: The previous solicitors had agreed to a potential future payment contingent on success rather than immediate payment, supporting the joint venture model
    2. Investment Agreements: Documents described alternately as “working capital” or “litigation funding” could support either interpretation
    3. Invoicing Practices: The existence of invoices never sent to the client suggested internal accounting measures rather than genuine client billing
    4. The August 2022 Letter: The defendant’s own reply stated this was prepared “so as to allow litigation funding to be obtained”

The Decision and Its Implications

Senior Costs Judge Rowley found decisively for the claimant, determining that:

    1. No solicitor-client relationship existed between the parties
    2. The relationship was “one of a partnership or joint venture of different entities bringing their skills to a project”
    3. Each entity invested time and effort at its own risk
    4. No implied retainer created liability for legal fees

This ruling provides useful guidance for costs liability in commercial legal ventures:

    • It emphasises the importance of clear, contemporaneous documentation
    • It demonstrates that courts will look beyond labels to examine the true nature of relationships
    • It confirms that not all legal work creates automatic entitlement to fees
    • It highlights the risks of selective document disclosure

Practical Lessons for Legal Professionals

This judgment offers several key takeaways:

    1. Document relationships immediately: The 18-month delay in producing client care documentation proved fatal to IPS Law’s case
    2. Be consistent: Contradictory positions in parallel proceedings undermined credibility
    3. Preserve and disclose relevant documents: Selective disclosure can lead to adverse inferences
    4. Clarify financial arrangements upfront: Ambiguity about payment structures invites disputes
    5. Consider regulatory requirements: Joint ventures may require different compliance approaches than traditional retainers

Conclusion

This case serves as a useful reminder about the importance of properly documenting professional relationships from the outset. While the potential rewards of Project Red Card were substantial, the failure to clearly establish whether IPS Law was acting as a solicitor or joint venture partner resulted in unpaid fees exceeding £159,000.

For law firms considering alternative fee arrangements or joint ventures, this judgment demonstrates that the true nature of the relationship—not merely how parties describe it—will determine costs liability. Clear, contemporaneous documentation remains the best protection against future disputes.

Amazon CPO Applications | Funding Arrangements And Costs Control In Collective Proceedings

The Competition Appeal Tribunal’s recent decision to grant collective proceedings orders in two substantial Amazon cases provides valuable guidance on several key costs issues affecting collective proceedings. The judgment establishes important principles for funding arrangements, costs oversight, and funder remuneration whilst addressing practical concerns about costs control in complex multi-million pound litigation.

Background | Two Major Collective Actions

The Tribunal considered applications for CPOs by Robert Hammond (representing consumers) and Professor Andreas Stephan (representing retailers/merchants), both alleging abuse of dominant position by Amazon companies. Both actions followed successful carriage disputes and involved substantial funding arrangements with commercial third-party funders.

The cases raised several costs-related challenges that required determination before the CPOs could be granted under the authorisation condition in section 47B of the Competition Act 1998.

The Costs Issues Before the Court

The Tribunal was required to assess whether the funding arrangements in both cases were adequate and appropriate for collective proceedings purposes. This involved examining several interconnected costs considerations:

First, whether the litigation funding agreements (LFAs) provided sufficient funding levels and appropriate control mechanisms. Professor Stephan had funding of up to £32.9 million guaranteed by Elliott group entities, whilst Mr Hammond had just under £16.7 million from FourWorld Global Opportunities Fund Ltd.

Second, whether adequate mechanisms existed for scrutinising and controlling legal costs during proceedings. The Tribunal expressed particular concern that neither proposed class representative appeared to have sufficient independent support for reviewing lawyers’ invoices.

Third, in Mr Hammond’s case specifically, whether the funder’s remuneration structure was excessive. Following the Supreme Court’s PACCAR decision, the LFA had been amended from percentage-based to fixed fee remuneration, but this resulted in a complex fee structure that Amazon challenged as potentially “wildly excessive.”

Fourth, whether adverse costs cover was adequate, though Amazon did not challenge the sufficiency of either the £15 million ATE insurance in Hammond’s case or the guarantee arrangements in Stephan’s case.

The Parties’ Positions on Costs

Amazon’s primary costs-related objection focused on Mr Hammond’s funding arrangements. Amazon argued that the funder’s return was “excessive” and in several scenarios “wildly excessive” and “indefensibly high,” relying on the Tribunal’s observations in Gormsen v Meta that funding arrangements with sufficiently extreme provisions could warrant refusal to certify.

Amazon particularly criticised the “Commitment Fee” element of 15% per annum on committed funds of £16.9 million, arguing it was inappropriate to calculate returns on committed rather than drawn-down funds, which inflated the funder’s return.

Amazon also suggested that Mr Hammond’s agreement to such arrangements demonstrated unsuitability to represent the class’s interests, drawing parallels with Riefa v Apple where certification was refused due to the proposed class representative’s lack of understanding of their LFA.

Neither party initially addressed the Tribunal’s concerns about independent oversight of legal costs, but following prompting during the hearing, both proposed class representatives agreed to instruct independent costs specialists.

The Court’s Decision on Costs Issues

Independent Costs Oversight | New Standard Practice

The Tribunal held that independent scrutiny of legal costs should become standard practice in collective proceedings. The Tribunal stated it was “important for proposed class representatives to be in a position independently to subject claims for costs to proper scrutiny, as the funder’s interests were not identical to those of the class.”

The Tribunal referenced its recent observation in Bulk Mail Claim Ltd v International Distribution Services that measures may need to be put in place to ensure PCRs get costs specialist advice on legal fees.

Professor Stephan agreed to instruct independent costs lawyers to provide monthly oversight reports and assist in determining whether clarification or adjustment of invoices was required. Mr Hammond committed to instructing a costs draftsman to review interim invoices quarterly with “the level of scrutiny that a corporate client would apply.”

Funder Remuneration | Deferred Assessment Approach

On Mr Hammond’s funder remuneration, the Tribunal declined to reject it as excessive at the certification stage whilst emphasising this was not approval. The Tribunal found the fee structure could potentially result in an exceptionally high return and specifically rejected FourWorld’s justification for the Commitment Fee element.

However, the Tribunal held that clause 9.2 of the LFA, making payment “subject to an order of the [Tribunal] to the contrary,” meant the reasonableness of the total funder’s fee was a matter for more detailed consideration at a later stage.

The Tribunal endorsed the approach from the Federal Court of Australia in Money Max Int Pty Ltd v QBE Insurance Group Ltd that court approval of reasonable funding commission rates should be left to a later stage when more probative and complete information would be available, typically at settlement approval or damages distribution.

The Tribunal referenced the Court of Appeal’s judgment in Gutman v Apple, which emphasised the Tribunal’s discretion at the time of judgment, and the recent Merricks v Mastercard decision, which demonstrated exercise of that discretion to allow a funder considerably less than provided under an LFA where proceedings had a poor result.

Costs Documentation Requirements

The Tribunal established that proposed class representatives should address in evidence the steps taken to secure LFAs on appropriate terms as standard practice. Mr Hammond provided a detailed witness statement explaining the evolution of his LFA following PACCAR and the competing Hunter application.

The Tribunal also noted that LFAs should be posted on claim websites with only minimal redactions for confidentiality, stating “this should be standard practice for all opt-out proceedings.”

Implications for Costs Practice

This judgment establishes several important precedents for costs practice in collective proceedings:

Independent Costs Oversight: The requirement for independent costs specialists to assist proposed class representatives in scrutinising legal fees is now established as standard practice. This addresses the inherent conflict between funders’ interests (who are reimbursed from recoveries) and class interests.

Deferred Funder Remuneration Assessment: The Tribunal’s approach of deferring detailed scrutiny of potentially high funder returns until settlement or judgment provides greater certainty for the certification process whilst preserving ultimate control over excessive fees.

Evidential Requirements: Proposed class representatives must now provide evidence of steps taken to secure appropriate funding terms, and LFAs should be published with minimal redactions.

Costs Control Mechanisms: The judgment demonstrates the Tribunal’s willingness to impose specific conditions regarding costs oversight as part of the authorisation process.

Multiple Solicitor Arrangements: Where two firms work together, the Tribunal accepted this could be appropriate given complementary capabilities, but emphasised that costs assessment would need to scrutinise claims to ensure no unreasonable overlap.

The decision reflects the Tribunal’s developing approach to balancing the need for adequate funding of collective proceedings against protection of class interests from excessive costs and funder returns. The establishment of independent costs oversight as standard practice represents a significant development that will affect all future collective proceedings applications.

For costs practitioners, the judgment provides valuable guidance on the level of scrutiny expected in collective proceedings and confirms the Tribunal’s commitment to maintaining effective control over costs whilst enabling meritorious claims to proceed.

QOCS Protection Limited To 50% Of Costs In Mixed Personal Injury Claims

In Searson v Chief Constable of Nottingham Constabulary [2025] EWHC 1982 (KB), Wall J’s costs decision following a partially successful appeal provides instructive guidance on how courts approach QOCS protection in mixed claims. The case demonstrates that even claimants bringing identical causes of action on the same claim form can face dramatically different costs consequences depending on whether they include a personal injury element.

The Costs Orders | Contrasting Protection Levels

Following HHJ Owen’s dismissal of all claims at trial, the costs orders strikingly differed between the two claimants:

  • Mr Searson: No QOCS protection – fully liable for the defendant’s costs
  • Mrs Searson: 50% QOCS protection under CPR 44.16 – enforcement limited to half the assessed costs

These differentiated orders survived appeal, confirming important principles about individualised assessment of QOCS protection.

Background | The Claims and Costs Context

The Searsons brought claims for false imprisonment, trespass to person and trespass to goods following their arrest and detention in March 2019. Crucially for costs purposes, Mrs Searson alone included a personal injury claim, alleging physical and psychological effects on her pre-existing health conditions.

The appeal succeeded only on a technical point regarding Mrs Searson’s detention review, establishing unlawful detention for 2 hours 14 minutes but resulting in nominal damages of £1.

The QOCS Analysis | Individual Assessment Required

Mr Searson | No Personal Injury Means No Protection

Wall J applied the principle from BB v Khayyat [2025] EWHC 443 (KB): QOCS protection is determined by reference to each claimant’s specific claims. Despite sharing a claim form with his wife’s personal injury claim, Mr Searson received no protection because he made no personal injury claim himself.

The court rejected arguments that claims could be “so bound up” as to extend QOCS protection by association – a position “sensibly abandoned” at the hearing.

Mrs Searson | The Mixed Claim Evaluation

For Mrs Searson, the court:

  • Correctly identified her claim as mixed under CPR 44.16
  • Conducted the required evaluation of how proceedings were actually conducted
  • Determined 50% protection appropriately reflected that “the majority of the trial was taken up with the determination of the lawfulness of her detention and not an assessment of her pleaded injuries”

Wall J emphasised the discretionary nature of costs orders, stating he would only interfere if the decision was one the judge “could not properly have come to.”

Key Principles for Costs Practice

Individual Assessment on Joint Claims

The decision confirms that:

  • Each claimant must be assessed individually for QOCS protection
  • Using the same claim form provides no costs protection advantages
  • “Protection by association” is not available even between spouses
  • Each claimant’s costs liability is determined separately

Mixed Claims | The Practical Evaluation

When assessing mixed claims under CPR 44.16, courts consider:

  • How trial time was actually allocated, not just the pleadings
  • The relative focus on personal injury versus other claims
  • What damages would have been recoverable without the personal injury element
  • The practical conduct of proceedings

The Discretionary Threshold

Wall J’s approach reinforces that:

  • Partial QOCS protection is a realistic outcome in mixed claims
  • Courts have wide discretion in determining protection levels
  • Appeals face a high threshold – the decision must be one the judge “could not properly have come to”

Practical Implications

This decision provides valuable guidance for costs practitioners handling multi-claimant cases:

Strategic considerations: When advising multiple claimants, practitioners must assess each client’s position individually. The inclusion of personal injury claims by one claimant provides no costs protection for others, even family members on the same claim form.

Mixed claims evaluation: The reality of trial conduct matters more than pleaded claims. Where substantial trial time addresses non-personal injury issues, expect reduced QOCS protection even where personal injury is pleaded.

Client advice: Practitioners must ensure clients understand that partial success may still result in significant costs exposure. Here, proving unlawful detention attracted nominal damages of £1 while exposing Mrs Searson to 50% of the defendant’s costs.

Procedural efficiency: Using a single claim form for multiple claimants offers no costs protection advantages and may complicate costs assessments where different protection levels apply.

The Broader Costs Context

This case reinforces developing jurisprudence on mixed claims and QOCS protection. It confirms courts will take a granular approach, examining:

  • The actual conduct of proceedings
  • The substantive focus of trial time
  • The true nature of claims pursued

The decision sits comfortably alongside BB v Khayyat in confirming that QOCS protection cannot be shared between claimants based on procedural convenience or personal relationships.

Conclusion

Searson provides clear guidance on individualised QOCS assessment in multi-claimant cases. The contrasting costs orders – full exposure for one claimant, 50% protection for another – demonstrate the importance of careful claim formulation and client advice about costs risks.

For costs practitioners, the case reinforces that strategic decisions about including non-personal injury claims alongside personal injury claims require careful cost-benefit analysis. The nominal damages award despite proving unlawful detention serves as a reminder that procedural victories don’t necessarily translate into costs protection where QOCS is limited or unavailable.

The decision confirms that courts will maintain a principled, individualised approach to QOCS protection, looking beyond claim forms to the substance of what each claimant actually pursues at trial.